IFRS for SMEs) IFRS for SMEs Income Taxes and Deferred Tax 2

Question 1

Under IFRS for SMEs, where is the income tax expense related to items recognized in other comprehensive income (OCI) presented?

Accepted Answer

In other comprehensive income, not in profit or loss

Answer

Tax effects of items recognized in OCI are themselves recognized in OCI to ensure the tax follows the transaction it relates to.

Question 2

Under IFRS for SMEs, a taxable temporary difference arises when:

Accepted Answer

An asset's carrying amount exceeds its tax base

Answer

A taxable temporary difference occurs when the carrying amount of an asset exceeds its tax base, creating a future taxable amount when the asset is recovered.

Question 3

Under IFRS for SMEs, deferred tax assets and liabilities should be presented in the balance sheet as:

Accepted Answer

Non-current assets and liabilities

Answer

IFRS for SMEs classifies deferred tax assets and liabilities as non-current, reflecting their long-term nature.

Question 4

An SME has unused tax losses. Under IFRS for SMEs, a deferred tax asset for those losses is recognized when:

Accepted Answer

It is probable that future taxable profits will be available against which the losses can be utilized

Answer

A deferred tax asset for unused tax losses is recognized only when it is probable that sufficient future taxable profit will be available to absorb the losses.

Question 5

Under IFRS for SMEs, deferred tax assets and liabilities may be offset when:

Accepted Answer

The entity has a legally enforceable right to set off current tax assets and liabilities and they relate to taxes levied by the same authority

Answer

Offsetting of deferred tax assets and liabilities is only permitted when there is a legally enforceable right and they relate to income taxes levied by the same taxation authority.

IFRS for SMEs (IFRS for Small and Medium-sized Entities (SMEs)) Practice Test

IFRS for SMEs (IFRS for Small and Medium-sized Entities (SMEs)) Practice Test

IFRS for SMEs) IFRS for SMEs Income Taxes and Deferred Tax 2